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3 Things You Can Do Right Now to Make Retirement Easier

Retirement is the most expensive financial goal we'll ever have. Even if you live modestly, it's likely you'll need $1 million or more to cover all of your expenses. Saving that much money isn't easy, but with proper planning, it's definitely doable. If you haven't already, do the following three things to set yourself on the right track.

1. Create a retirement plan.

You'll never know if you're saving enough money until you actually estimate how much your retirement will cost. The first step is to figure out how many years of savings you need. Estimate your life expectancy, and figure high. If you're in good health, it's likely you'll live past 90 or maybe even 95. Subtract your preferred retirement age from your estimated life expectancy to get a rough idea of your retirement length.

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Next, calculate how much money you'll spend during each of those years. Total your estimated living costs in retirement, including housing payments, insurance premiums, groceries, utilities, and any other recurring payments you expect. Leave out expenses you have today that you don't plan to carry into retirement, like child care and saving for retirement.

Consider budgeting extra for expenses that may balloon in retirement, like travel or healthcare. Multiply your total estimated monthly expenses by 12 to get your estimated annual expenses and then multiply that by the number of years in your planned retirement. Don't forget to add 3% per year for inflation. If you're using a retirement calculator, it should do this for you. It may also ask about your estimated investment rate of return. Use 5% to 6% to be conservative.

Your calculator should tell you the total amount you need to save overall and per month to cover your retirement expenses, but you don't have to save all of this alone. Social Security will cover some of it, and your employer may offer a 401(k) match too. Estimate how much these additional income sources will amount to and subtract them from your total retirement savings goal to figure out what you need to save on your own. If you don't know how much to estimate for Social Security, create a my Social Security account to find your likely benefit amount.

2. Boost your retirement account contributions.

Once you have your retirement plan, take another look at your current retirement contributions and try to increase them if they're not enough. If you can't save as much as you'd like right now, save what you can and look for opportunities to free up more cash, like reducing how often you dine out and canceling services you don't use. Put that extra money toward your retirement.

Take advantage of any employer 401(k) match that's offered, but don't stop there. You can contribute up to $19,000 to a 401(k) in 2019 or $25,000 if you're 50 or older, plus another $6,000 to an IRA or $7,000 if you're 50 or older. You don't have to max these out, but if you do, you may be able to retire even earlier than you'd planned.

3. Seek out every opportunity to grow your income.

Increasing your income today by pursuing promotions or starting a side hustle can help your retirement savings in two ways. You'll have more money to put aside for savings, and it could also increase your eventual Social Security checks. Your Social Security benefit is based on your average monthly income during your 35 highest-earning years, with adjustments for inflation. Anything you can do to increase your income today will bring up that average and result in larger checks, which will ease the strain on your personal savings.

Even if you cannot increase your income, working at least 35 years will boost the size of your checks because you won't have any zeroes weighing down your average. At the very least, work long enough to earn at least 40 credits because, without those, you won't even qualify for Social Security. A credit is defined as $1,360 of earnings in 2019, and you can earn a maximum of four credits per year.

Saving for retirement may never be a walk in the park, but you can make it less stressful by following these steps. Reevaluate your savings and retirement plan every year or two and make adjustments as needed to keep yourself on track.

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